CBK to finalise study on law capping rates

The Central Bank of Kenya (CBK) is set to conclude a study on the law capping interest rates and its impact on the economy, CBK Chairman Mohammed Nyaoga announced on Tuesday.

This comes as concern grows over the slow growth of credit following the implementation of the law last September.

“That (study) is (meant) to assist law makers to make a decision on whether that law should remain or whether it is affecting the economy and (whether) it should change,” said Mr Nyaoga in Nairobi at a meeting hosted by Creditinfo Credit Bureau for bank executives.

“We started (the study) at the beginning of this year and by the end of this month I think it should be out.”

Private sector credit growth fell to 4.3 per cent in December 2016 compared to more than 17 per cent a year earlier, CBK data show.

Critics have accused banks of engaging in blackmail and economic sabotage to force amendments though.

“There is a concerted effort by banks, which have formed cartels, to keep off credit from the public thus blackmailing Parliament into changing a law that protects Wanjiku,” said the architect of the law, Kiambu Town MP Jude Njomo in March.

Mid this month, the International Monetary Fund (IMF) piled pressure on Kenya to remove interest rate controls maintaining they were harming the economy.

But the Consumers Federation of Kenya (COFEK) secretary-general Stephen Mutoro has hit out at the International Monetary Fund for its sustained push against the caps, claiming that failed fund policies are to blame for the sad state of Kenya banking industry.